(Dec. 20) – State budget experts predicted today that state revenues would continue to trend upward. But they warned the legislative Joint Budget Committee that a high level of economic uncertainty was slowing the recovery and could reverse it.
In the latest quarterly snapshot of the state’s economic health, the legislature’s chief economist, Natalie Mullis, estimated that the state’s revenues in the current fiscal year would be $270 million higher than had been estimated in September.
But she said the forecast assumed that the federal government would, before the end of March, avoid or reclimb the so-called “fiscal cliff’’ of tax increases and budget cuts. Unless a deal is reached in Washington, she said, Colorado’s economy will plunge into recession. Mullis said the forecast also assumed that the European Union wouldn’t fall apart.
Though the revenue growth estimate from Gov. John Hickenlooper’s budget director, Henry Sobanet, was lower, at $160 million, he told the JBC that the continuing favorable trends in revenue, job creation and business formation put the state “on the cusp of a sustained expansion” – unless the country falls off the fiscal cliff.
“If things go right in Washington, Colorado’s in a great position, but that’s a big if,” said Rep. Claire Levy (D-Boulder), the senior House Democrat on the JBC. “We need some breathing room so we can address Colorado’s critical mental health, early childhood education and health care needs.”
“We won’t finalize the state budget till after the March forecast, and I’m confident we’ll have more certainty then,” said Rep. Crisanta Duran (D-Denver), who also sits on the six-member JBC.